Presenting a promised ‘pro-people’ budget, the railway minister said that economic viability is not the only index of development, according top priority to social commitment.

She went on to add, “People expect to get better rail and train facilities. Development should not be restricted to only few people. People want better connectivity between stations in the nation. My priorities will include better passenger amenities, safety and security and provision of good quality food and drinking water”.

The UPA government presented its farewell budget (Interim Budget) ahead of general elections slated later this year. While the markets were disappointed that the proposals were devoid of a stimulus package, there were no sops for the Indian taxpayers.

Here is an analysis of Interim Budget 2009-10 from top research houses across India.
Kaushal Sampat, COO, Dun & Bradstreet India

Although this was an interim budget, it was expected that there would be announcements of some policy measures that would be growth stimulating in nature.

While acknowledging that the Indian economy is faced with significant challenges in the financial year ahead, the Finance Minister stuck with the conventions of an interim budget and did not announce any policies that could trigger retrieval of the economy from the current slowdown.

Although the outlay on certain infrastructure projects has been increased, it is doubtful if this would be enough to kick-start investment at the required levels.

In line with our expectations, the fiscal deficit has surged and stands at around 7.8% of GDP in FY09 (including off-budget liabilities).

Although the high fiscal deficit has potential risks for the economy in the future, it is inevitable given the need for substantial increase in Government expenditure and the limited scope for revenue mobilization.

With the lack of major growth stimulating measures in the interim budget, we expect the RBI to cut interest rates further before the April’08 monetary policy review to stimulate demand to a certain extent.

Indian Railways will stay on growth track in 2009-10 projecting cash surplus of Rs 18,847 crore after cutting most of the passenger fares, even as economic slowdown affected its freight business.

Even as its industrial customers face a crippling slowdown, the Railways expects to earn gross traffic receipts of Rs 93,159 crore in 2009-10, exceeding the revised estimates for the current fiscal by Rs 10,766 crore. Passenger fares for second class (above Rs 50) as also for the luxury trains have been reduced by two per cent.

The pace of expansion is affected by the global downturn impacting the Indian business, but the balance-sheet of the country’s largest transporter remains robust.

Expenses (operating ratio) would a tad higher at 89.9 per cent because of increased salary bill after implementation of the Sixth Pay Commission in the next financial year as compared to 88 per cent in the current fiscal.

As the rest of the economy is grappling with business setbacks, the Railways would pay a higher dividend of Rs 5304 crore to its owners — the government.

“…Railways have kept the human aspect as the central focus and achieved an extraordinary feat without puttany extra burden on the common man or the employees,” Railway Minister Lalu Prasad said while presenting the interim Budget in Parliament today.

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